You feel like you have just run a marathon — you’ve sparked interest, warmed the lead up with a sequence of emails, qualified and given a demo of your product, and finally got a nod from your lead —  but the race to the finish line is far from over. At least until the lead signs over the dotted line. And there’s where a sales contract plays a role in sealing the deal. 

Whether you are a sales rep, business owner, or in finance, chances are you have heard of a sales contract, sales agreement or sales proposal in your line of work. 

Sales contract is a confirmation of interest from the customer. And that is the ultimate goal of every sales rep — to keep all the cogs in the sales wheel moving till the sale is complete.


sales contract sales contract

What is a sales contract?


A sales contract recognises the sale between a buyer and seller, along with terms and conditions of the sale. It is created in the final stages of selling. A sales contract is an agreement between you and a buyer where you agree to deliver or sell a product/products to a buyer for a fixed price. 

What is the purpose of a sales contract?


A sales contract is usually created for the following reasons:

Legally binding

Protects the interests of the seller and buyer in times of conflict or disagreement

Assigns role

Clarifies the modes of business operation and  responsibilities and obligations of parties involved 

Increases transparency

It doesn’t leave any scope for misinterpretation and acts as a proof of sale

What can you use a sales agreement for?

Whenever a sale takes place for a significant amount ( the amount limit depends on different country laws), a sales contract should be created to protect both parties. 

You can use a sales agreement to 

Sales agreement vs. Bill of sale


A bill of sale only indicates the transfer of ownership of a product, from the buyer to the seller. For example, when you purchase a product from Amazon or Walmart, you get a bill for your purchase. 

Whereas a sales agreement delves a little deeper including details such as legal ramifications if any party fails to carry out their responsibilities, warranty, payment plan, etc. 

For example, when a travel company signs up for CRM software on an annual basis, all the terms and conditions are mentioned in the sales contract, such as: 

  • Duration of the contract
  • Obligations of the CRM provider
  • Obligations of the travel company

Essential components of a sales contract


A sales contract indicates that there is an ongoing transaction between two parties and is a legal document that is also used for record-keeping purposes. 

The sales contract usually identifies the parties involved such as:

  • Seller
  • Buyer
  • Goods or services
  • Other important terms

Components of a sales contract may differ from firm to firm, but essentially comprises the following:

  • Parties involved
  • Description of goods and services
  • Payment terms
  • Delivery terms
  • Terms of Service
  • Licenses, and the price and discount
  • Which judicial court to go to, in case there is a conflict

Benefits of creating a sales contract 

Minimizes risk 

Sales contract secures you and your potential customers by clearly stating the terms and conditions of the service or product being offered. 

In case you fail to deliver, or the potential customer fails to make the payment, it secures both parties. 

Clarity to both parties 

Often miscommunication happens between you and your potential customers after a sale. Sales contract clarifies the exact deliverables, pipeline, payment terms, etc. This prevents any form of miscommunication or misunderstanding between parties involved. 

Provides legal backup

Everything might be rosy before a sale. But you don’t know if your customer could turn over a bad leaf and not honour their payments. Having a sales contract secures your future interests as well, so you can take them to court in case of any mishap. 

How to draft a sales contract 


From requesting contracts to managing sign offs in the contracts, sales reps have to juggle between multiple processes while focusing on their main function: reaching sales targets. 

So how do you get started with creating a sales contract that will be easy for you to replicate with every sale? 

We break it down for you: 

sales contract process sales contract process

1. Request for a contract

The sales contract process begins with a request from the prospect, who is interested in purchasing from you. This stage starts when the prospect is convinced about your product, agrees to buy from you and asks you to create a sales contract. 

The requirements from the prospect differ according to industries, so you may have to tweak it to suit their needs. 

2. Creating the contract

The next stage in the sales contract process involves creating and sending out the contract to the prospect. You have to run it by your legal and other business teams involved who have to approve your document before you hit send.

3. Prospect approval

Once the legal teams approve, you send it to the prospect for approval and signature. Prospects may have feedback which may require you to edit parts of the contract. 

4. Final review

After a final review by legal teams, the contract is passed to the prospect and finally they sign over the dotted line. Contracts should be reviewed and renewed periodically when the expiry date nears. 

Automating the sales contract process


Often, salespeople struggle with antiquated processes that involve using complicated software and emailing contracts back and forth between multiple parties.

Some of the challenges with having a manual sales contract process include:

This leads us to the need for automating the sales contract process, just like any other stage of the sales process, that is highly automated today. 

Benefits of automating sales contract process

Improved sales efficiency

Manual sales contract management takes time. There are many sales automations that have come into play that streamline and automate the contract management process. 

For instance, with a CRM, you can save the sales contract document template within your CRM and share it with the prospect as soon as they confirm their interest to purchase from you. This helps reduce manual effort from your salespeople and resource savings. 

Shorter sales cycle

Creating the sales contract document is just the first step, but getting the nod from multiple stakeholders takes more time if you factor in all the back and forth. 

If you use a sales automation tool, all teams involved in the sales contract management process get complete visibility into the movement of the document, approvals, and can coordinate better. This leads to more sales in a shorter period of time. 

Improved compliance 

Multiple back and forths also increase the margin for error, thereby leading to a sales contract document laden with mistakes. 

This could be troublesome when either party wants to terminate the contract, or find fault in the product or service offered. The sales contract would no longer hold good. 

Greater transparency and simplicity of workflows 

Automating the sales contract process improves sales velocity, by offering increased transparency to all stakeholders involved. 

Contract moves through approvals quicker through workflows and you don’t need manual follow ups and reminders. 

Using a CRM you can set up workflows that create reminders for approvals, and keep moving the needle on the deal. 

Paperless transactions 

Since everything is updated in the system, you don’t have to carry large binders from one team to another to secure their approvals. Everything is done online and hence ensures there is no paper trail. 

How to generate accurate sales contracts with a CRM 

1. Share documents in few clicks


Sales contract is seen as the last leg of the sales process, but oftentimes, it also gets tossed around between teams causing delay in closing deals. 

With a CRM that has CPQ capabilities, you can share documents as attachments to your prospects right from the CRM, keep track of it’s progress, and capture custom stages unique to your sales process. 


sales contracts sales contracts

2. Use pre-saved sales contract templates

Don’t waste time creating new sales contracts from scratch for each prospect. 

With a CRM software, you can fast track the sales contract process by setting up branded document templates like sales agreements, Master Service Agreement (MSA), Non-disclosure Agreement (NDA) etc.


sales contract templates sales contract templates

3. Improve collaboration between teams


Finalising the sales agreement can be a tedious process as it requires approval from multiple stakeholders like finance and legal teams. 

Sharing agreements on email, and waiting for approvals lengthens your sales process, and the customer is left waiting for more time than required. 

A CRM software can help simplify coordination between multiple teams that can be visible within the CRM. 

sales contract team collaboration sales contract team collaboration

4. All your data in one place


If your sales team is already using a CRM like Freshsales, then all the customer data like website interaction, email conversations, phone logs, etc will be captured in the CRM. 

You don’t have to toggle between multiple screens to collect data on your leads, and then send out sales contracts when they convert. You have all the context you need throughout the entire sales process. 

social selling social selling

5. Integrate with multiple tools 


A CRM like Freshsales integrates with multiple document management software like Pandadoc and Docusign. So you can handle signatures from multiple parties from within the CRM. Integrating all the tools you use to manage contracts with your CRM ensures a smooth flow of documents to close deals sooner. No more toggling. 

CPQ software like Freshsales helps simplify the sales process, by reducing time spent on creating documents, coordinating with different departments and also quoting the right price for the right clients.